India’s Push for Rare Earth Permanent Magnet Manufacturing

India has recently approved a Rs 7,280-crore scheme to boost the manufacturing of rare earth permanent magnets (REPM). This move comes amid growing concerns over China’s dominance in the global supply of these magnets. REPMs are vital for electric vehicles, renewable energy, aerospace, defence, and electronics. India aims to reduce its reliance on imports and develop a domestic manufacturing base.

China’s Dominance and Global Supply Risks

China controls over 90 per cent of rare earth magnet manufacturing and processing. It uses this dominance as leverage during trade tensions, as seen in 2024 when it imposed export controls on magnets. This created supply chain disruptions globally. Other countries, including India, have since sought alternatives to secure their supply chains.

Government Scheme to Promote REPM Manufacturing

The approved scheme supports 6,000 metric tonnes per annum (MTPA) of integrated REPM manufacturing capacity. Five beneficiaries will be selected through competitive bidding, each eligible for up to 1,200 MTPA. The scheme offers Rs 6,450 crore in sales-linked incentives over five years and Rs 750 crore as capital subsidy. It focuses on sintered neodymium-iron-boron (NdFeB) magnets, which are the strongest and most commercially demanded.

Production Process and Magnet Composition

REPM production involves mining, beneficiation, processing, refining, conversion to metal and alloy, and magnet manufacturing. The scheme supports facilities capable of converting rare earth oxides to metal, metal to alloy, and alloy to magnets. These magnets use light rare earths like neodymium and praseodymium for strength, and heavy rare earths like dysprosium and terbium for heat resistance and demagnetisation prevention.

India’s Current Status and Challenges

India imports over 90 per cent of its rare earth magnets, mostly from China. Domestic production of raw materials is limited, especially for heavy rare earth oxides. Indian Rare Earths Limited produces some light rare earth oxides but not enough for large-scale manufacturing. China’s cost advantage due to scale and integrated supply chains remains a major challenge for India.

Global and National Initiatives

Globally, the Quad countries and G7 have launched initiatives to reduce dependence on China for critical minerals. India’s National Critical Mineral Mission (NCMM) aims to secure mineral supply chains from 2024 to 2031 with a Rs 16,300-crore outlay. Amendments to the Mines and Minerals (Development and Regulation) Act empower the government to auction critical minerals. India has auctioned 34 critical mineral blocks and established Khanij Bidesh India Limited to explore and develop overseas mineral assets, including lithium in Argentina.

Future Prospects and Strategic Importance

India’s new scheme is a first step towards self-reliance in REPM manufacturing. The capacity planned is modest compared to China’s 2,40,000 tonnes annual production. Success depends on securing raw materials, scaling production, and competing with China’s cost efficiency. The government’s push aligns with India’s ambitions in electric mobility, renewable energy, and defence technologies.

Questions for UPSC:

1. Discuss in the light of India’s National Critical Mineral Mission the challenges and opportunities in securing critical mineral supply chains.
2. Critically examine China’s dominance in the rare earth permanent magnet market and its implications for global trade and geopolitics.
3. Explain the role of rare earth permanent magnets in renewable energy and electric vehicles. With suitable examples, discuss India’s strategy to reduce import dependence.
4. Comment on the significance of international collaborations such as the Quad and G7 initiatives in securing critical mineral resources for member countries.

Answer Hints:

1. Discuss in the light of India’s National Critical Mineral Mission the challenges and opportunities in securing critical mineral supply chains.

1. India’s NCMM (2024-31) aims to ensure reliable access to critical minerals through exploration, mining, processing, and recycling.
2. Challenges include limited domestic production of heavy rare earths, dependence on imports, and technological gaps.
3. Opportunities arise from auctioning 34 critical mineral blocks and strengthening regulation via amended MMDR Act.
4. Khanij Bidesh India Limited facilitates overseas mineral asset exploration, e.g., lithium in Argentina.
5. NCMM’s Rs 16,300 crore outlay supports infrastructure, technology, and financing to build a resilient supply chain.
6. Global geopolitical tensions and supply disruptions show the need for self-reliance and diversification.

2. Critically examine China’s dominance in the rare earth permanent magnet market and its implications for global trade and geopolitics.

1. China controls over 90% of global REPM manufacturing and processing, creating a near-monopoly.
2. China’s dominance allows it to leverage export controls during trade disputes, e.g., 2024 magnet export restrictions.
3. Its integrated value chain and scale provide cost advantages, challenging competitors.
4. This dominance risks global supply chain disruptions, affecting sectors like EVs, defence, and renewable energy.
5. Other countries (Japan, Vietnam) have minimal market share, emphasizing China’s unique position.
6. Geopolitically, China’s control influences strategic alliances and prompts initiatives like Quad and G7 to reduce dependence.

3. Explain the role of rare earth permanent magnets in renewable energy and electric vehicles. With suitable examples, discuss India’s strategy to reduce import dependence.

1. REPMs (especially NdFeB magnets) are essential for high-efficiency motors in EVs and generators in wind turbines.
2. They enable lightweight, powerful, and durable components critical for clean energy technologies.
3. India’s demand for REPM is expected to double by 2030 due to EV adoption and renewable energy expansion.
4. The Rs 7,280 crore government scheme promotes integrated domestic REPM manufacturing capacity (6,000 MTPA).
5. India focuses on sintered NdFeB magnets, supporting conversion from rare earth oxides to final magnets.
6. Complementary initiatives include NCMM, mineral block auctions, and overseas exploration via KABIL to secure raw materials.

4. Comment on the significance of international collaborations such as the Quad and G7 initiatives in securing critical mineral resources for member countries.

1. Quad (India, Australia, Japan, US) launched initiatives to diversify and secure critical mineral supply chains, reducing China dependence.
2. G7’s Critical Minerals Action Plan emphasizes cooperation in exploration, processing, and recycling technologies.
3. Collaborations enable sharing of technology, investment, and strategic resource access globally.
4. They encourage resilient supply chains by pooling resources and expertise across member countries.
5. Such alliances counter geopolitical risks and supply disruptions caused by dominant suppliers like China.
6. India’s participation aligns with its strategic goals for self-reliance and global market integration in critical minerals.